I

107TH CONGRESS

1ST SESSION H. R. 974

To increase the number of interaccount transfers which may be made from

business accounts at depository institutions, to authorize the Board of

Governors of the Federal Reserve System to pay interest on reserves,

and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

MARCH 13, 2001

Mrs. KELLY (for herself, Ms. CAPITO, and Mr. CANTOR) introduced the

following bill; which was referred to the Committee on Financial Services

A BILL

To increase the number of interaccount transfers which may

be made from business accounts at depository institutions, to authorize the Board of Governors of the Federal

Reserve System to pay interest on reserves, and for

other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Small Business Inter5 est Checking Act of 2001’’.
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1 SEC. 2. INTEREST-BEARING TRANSACTION ACCOUNTS AU2 THORIZED FOR ALL BUSINESSES.

3 Section 2 of Public Law 93–100 (12 U.S.C. 1832)

4 is amended—

5 (1) by redesignating subsections (b) and (c) as

6 subsections (c) and (d), respectively; and

7 (2) by inserting after subsection (a) the fol8 lowing:

9 ‘‘(b) Notwithstanding any other provision of law, any

10 depository institution may permit the owner of any deposit

11 or account which is a deposit or account on which interest

12 or dividends are paid and is not a deposit or account de13 scribed in subsection (a)(2) to make up to 24 transfers

14 per month (or such greater number as the Board may de15 termine by rule or order), for any purpose, to another ac16 count of the owner in the same institution. Nothing in this

17 subsection shall be construed to prevent an account of18 fered pursuant to this subsection from being considered

19 a transaction account (as defined in section 19(b) of the

20 Federal Reserve Act for purposes of such Act.’’.

21 SEC. 3. PAYMENT OF INTEREST ON RESERVES AT FEDERAL

22 RESERVE BANKS.

23 (a) IN GENERAL.—Section 19(b) of the Federal Re24 serve Act (12 U.S.C. 461(b)) is amended by adding at

25 the end the following new paragraph:

26 ‘‘(12) EARNINGS ON RESERVES.—
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1 ‘‘(A) IN GENERAL.—Balances maintained

2 at a Federal reserve bank by or on behalf of a

3 depository institution may receive earnings to

4 be paid by the Federal reserve bank at least

5 once each calendar quarter at a rate or rates

6 not to exceed the general level of short-term in7 terest rates.

8 ‘‘(B) REGULATIONS RELATING TO PAY9 MENTS AND DISTRIBUTION.—The Board may

10 prescribe regulations concerning—

11 ‘‘(i) the payment of earnings in ac12 cordance with this paragraph;

13 ‘‘(ii) the distribution of such earnings

14 to the depository institutions which main15 tain balances at such banks or on whose

16 behalf such balances are maintained; and

17 ‘‘(iii) the responsibilities of depository

18 institutions, Federal home loan banks, and

19 the National Credit Union Administration

20 Central Liquidity Facility with respect to

21 the crediting and distribution of earnings

22 attributable to balances maintained, in ac23 cordance with subsection (c)(1)(B), in a

24 Federal reserve bank by any such entity on

25 behalf of depository institutions.’’.
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1 (b) AUTHORIZATION FOR PASS THROUGH RESERVES

2 FOR MEMBER BANKS.—Section 19(c)(1)(B) of the Fed3 eral Reserve Act (12 U.S.C. 461(c)(1)(B)) is amended by

4 striking ‘‘which is not a member bank’’.

5 (c) TECHNICAL AND CONFORMING AMENDMENTS.—

6 Section 19 of the Federal Reserve Act (12 U.S.C. 461)

7 is amended—

8 (1) in subsection (b)(4) (12 U.S.C. 461(b)(4)),

9 by striking subparagraph (C) and redesignating sub10 paragraphs (D) and (E) as subparagraphs (C) and

11 (D), respectively; and

12 (2) in subsection (c)(1)(A) (12 U.S.C.

13 461(c)(1)(A)), by striking ‘‘subsection (b)(4)(C)’’

14 and inserting ‘‘subsection (b)’’.

15 SEC. 4. INCREASED FEDERAL RESERVE BOARD FLEXI16 BILITY IN SETTING RESERVE REQUIRE17 MENTS.

18 Section 19(b)(2) of the Federal Reserve Act (12

19 U.S.C. 461(b)(2)) is amended—

20 (1) in clause (i), by striking ‘‘the ratio of 3 per

21 centum’’ and inserting ‘‘a ratio not greater than 3

22 percent (and which may be zero)’’; and

23 (2) in clause (ii), by striking ‘‘and not less than

24 8 per centum,’’ and inserting ‘‘(and which may be

25 zero),’’.
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1 SEC. 5. TRANSFER OF FEDERAL RESERVE SURPLUSES.

2 (a) IN GENERAL.—Section 7(b) of the Federal Re3 serve Act (12 U.S.C. 290) is amended by adding at the

4 end the following new paragraph:

5 ‘‘(4) ADDITIONAL TRANSFERS TO COVER IN6 TEREST PAYMENTS FOR FISCAL YEARS 2001

7 THROUGH 2005.—

8 ‘‘(A) IN GENERAL.—In addition to the

9 amounts required to be transferred from the

10 surplus funds of the Federal reserve banks pur11 suant to paragraph (1), the Federal reserve

12 banks shall transfer from such surplus funds to

13 the Board of Governors of the Federal Reserve

14 System for transfer to the Secretary of the

15 Treasury for deposit in the general fund of the

16 Treasury, such sums as are necessary to equal

17 the net cost of section 19(b)(12), as estimated

18 by the Office of Management and Budget, in

19 each of the fiscal years 2002 through 2006.

20 ‘‘(B) ALLOCATION BY FEDERAL RESERVE

21 BOARD.—Of the total amount required to be

22 paid by the Federal reserve banks under sub23 paragraph (A) for fiscal years 2002 through

24 2006, the Board of Governors of the Federal

25 Reserve System shall determine the amount

26 each such bank shall pay in such fiscal year.
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1 ‘‘(C) REPLENISHMENT OF SURPLUS FUND

2 PROHIBITED.—During fiscal years 2002

3 through 2006, no Federal reserve bank may re4 plenish such bank’s surplus fund by the amount

5 of any transfer by such bank under subpara6 graph (A).’’.

7 (b) TECHNICAL AND CONFORMING AMENDMENT.—

8 Section 7(a) of the Federal Reserve Act (12 U.S.C.

9 289(a)) is amended by adding at the end the following

10 new paragraph:

11 ‘‘(3) PAYMENT TO TREASURY.—During fiscal

12 years 2002 through 2006, any amount in the sur13 plus fund of any Federal reserve bank in excess of

14 the amount equal to 3 percent of the paid-in capital

15 and surplus of the member banks of such bank shall

16 be transferred to the Secretary of the Treasury for

17 deposit in the general fund of the Treasury.’’.

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